Kmart Australia Limited

This report aims to analyse the Certified Agreement between SDAEA and Kmart Australia Limited, which outlines the rights and responsibilities of Kmart employees. In particular, the 1998 Certified Agreement and the 2001 Certified Agreement have been utilised in the analysis. These agreements have been reviewed according to five key allowable matters (rate of pay, hours of operation, ordinary maximum hours, penalty and over-time conditions, and annual leave) and have been compared and contrasted for any differences. Through this analysis, it was found that there were three main changes between the 1998 and 2001 Agreements.

There has been a minimal pay increase for all full-time and part-time staff (1. 1% per year), Saturday trading hours have been extended by two hours, and the required number of hours that need to be worked before penalty rates apply has been increased (increased by two hours per week for full-time employees, and increased by four hours per 4-week cycle for part-time employees). Recommendations have been made to the employer regarding labour costs, and to the employees regarding wage increases and improved conditions. Kmart Australia Limited opened its first store in 1969.

Offering discount goods and promising the 'lowest price guaranteed', Kmart has continue to grow and now has 162 stores across Australia and New Zealand. (Kmart Australia Limited, 2001). Kmart is part of the Coles Myer group, of which the brigade of brands includes Myer Grace Brothers and Target Department Stores. Financially, Kmart is performing well. Compared to sales of $3. 904 million in 2002, in 2003 Kmart's sales increased by 11. 9%, to $4. 370 million (Coles Myer Limited, 2004). Retail earnings before interest and tax were $103.

6 million in 2003, a huge 66% increase from the 2002 retail earnings of $62. 4 million (Coles Myer Limited, 2004). Kmart today employs over 28,000 people, and the rights and responsibilities of these staff members are set out in the Certified Agreement between SDAEA and Kmart Australia Limited. The aim of this report is to analyse this Certified Agreement, in respect to hours of work, hourly rates of pay, penalty and overtime conditions, and annual leave entitlements. To assist in this analysis, two Certified Agreements will be utilised.

The 1998 Agreement, set on the 24th June, will be reviewed and compared with the 2001 Agreement, set on the 18th July. In particular, the differences between the two Agreements will be analysed in terms of their impact on both the employees and on the employer. Kmart employs full-time, part-time and casual staff, so these groups have been reviewed independently to show any differences. It took approximately six weeks to negotiate the 2001 agreement with Kmart and its employees, which is a fairly short period of time considering the importance of the decisions.

The 1998 Certified Agreement was compared to the 2001 Certified Agreement in regard to five key allowable matters. All comparisons were based on a Level One Retail Assistant. Rate of pay was analysed first, as it sets the scene for employee rewards and the extent to which they exist. Trading hours were also reviewed, as a measure of business success and of the change in demands of the employer. Lastly, ordinary maximum hours of work, penalty conditions and annual leave entitlements were also compared, to see whether any distinct changes had occurred.

There has been a minimal increase in pay for full-time and part-time staff (1. 1% per year), Saturday trading hours have been extended by 2 hours, and the required number of hours that need to be worked before penalty rates apply has increased for both full-time and part-time staff. For the employees, the pay increase means greater financial rewards for doing their job. This pay increase would have no doubt been greatly appreciated. However, for the employer, this pay increase would also have been welcomed, because it is only a slight increase when compared to Kmart's growth in sales revenue.

Kmart is savings money by not having to pay their staff a higher rate. The extension of business hours has different implications for employees and for Kmart Australia Limited. For the employer, this increase in operating hours means additional labour costs, however it is also likely to result in higher sales. For it to be worthwhile to retain these extended trading hours, Kmart needs to calculate the additional profit (or loss) incurred. For casual staff, the increase in operating hours means a greater chance to work and earn income.

However, for full-time or part-time staff, the extension of trading hours means that they can now be rostered to work until 10pm on a Saturday (where previously they were only required until 8pm), but they will not receive any additional pay for working late, nor are they able to refuse to work these hours. The increase of required hours before penalty rates apply basically makes it near impossible for staff to receive over-time wages. For Kmart, this means that their labour costs are minimised as they are seldom required to pay their employees at penalty rates.

For full-time employees, this change means that they must now work at least 8 hours over and above their standard 40 hours of work per week before they receive an over-time rate. For part-time employees, this means that they must work at least 4 hours over and above their 140 hours per 4-week cycle before they receive a higher rate. Casual staff does not receive penalty rates, but are paid a wage rate with a 20% loading to account for this. There has been no change in the conditions of casual employees.